VOLKSWAGEN GROUP OF AMERICA ANNOUNCES IT WILL PRODUCE CARS IN CHATTANOOGA; DECISION MARKS COMPANY'S ONGOING COMMITMENT TO NORTH AMERICAN MARKET

Company will invest $1 billion and bring about 2,000 direct jobs to tri-state area

HERNDON, Va. (July 15, 2008) - Volkswagen Group of America, Inc. announced today that it will build a U.S. automotive production facility in Chattanooga, Tenn., where it will produce a car designed specifically for the North American consumer and invest $1 billion in the economy. The announcement is an important element of the company's overall U.S. strategy of connecting with its customers, increasing its competitiveness and tripling its U.S. customer base in the next decade.

"The U.S. market is an important part of our volume strategy and we are now very resolutely accessing that market," said Prof. Martin Winterkorn, CEO of Volkswagen AG. "Volkswagen will be extremely active there. This plant represents a milestone in Volkswagen's growth strategy. We will be selling 800,000 Volkswagens in the U.S. by 2018, and this new site will play a key role. This, along with our growth strategy, is a prerequisite for the economic success of the company in the dollar region. We look forward to establishing an important mainstay for ourselves when we become the biggest European carmaker there."

"This is a significant step forward in achieving our goals in the U.S. market and a clear sign of the Volkswagen Group's commitment to the North American consumer. Today's decision is a fundamental part of our new strategic direction in the U.S. and our five-pillar strategy," said Stefan Jacoby, President and CEO of Volkswagen Group of America. "Chattanooga is an excellent fit for the Volkswagen culture, having an exceptional quality of life and a long manufacturing tradition."

The company will build the facility in the Enterprise South Industrial Park, located 12 miles northeast of downtown Chattanooga. The 1,350-acre site is 100 percent owned by the city of Chattanooga and Hamilton County and is certified as an industrial megasite by the Tennessee Valley Authority. Enterprise South is adjacent to Interstate 75. Initial production capacity for the facility is anticipated to be 150,000 vehicles, including a new midsize sedan designed specifically for the North American market. Production is scheduled to begin in early 2011.

"I'm enormously pleased by the announcement from Volkswagen Group of America and grateful for the company's investment in Chattanooga and in the people of Tennessee," said Tennessee Gov. Phil Bredesen. "I believe Volkswagen chose Tennessee because of our shared values, our commitment to innovation and our strong respect for the environment. This project will have a significant impact on the economy of Tennessee and the region for decades to come."

"I couldn't be more pleased that the spirit of partnership between the state of Tennessee, Volkswagen and the government and business leadership of Chattanooga and Hamilton County has resulted in this significant investment in Enterprise South," said Matt Kisber, commissioner of the Tennessee Department of Economic and Community Development. "Volkswagen's investment in this community means the hard work and dedication demonstrated by people at the state and local level to create one of the best business climates in the country is paying off."

"We started with a vision of transforming an idle Army facility into the source of thousands of family-wage jobs," said Hamilton County Mayor Claude Ramsey. "Over the last 14 years, I've worked with four different city mayors as well as county commissioners, city councilmen and countless others in overcoming barriers and objections to that plan. Today, we stand with our new friends from Volkswagen to make a historic announcement that will create new opportunities for our community for years to come."

"Volkswagen and Chattanooga have a lot in common," said Chattanooga City Mayor Ron Littlefield. "Both are serious about environmental sustainability and 21st Century manufacturing."

Environmental responsibility is a core value of the Volkswagen Group. The company's focus on sustainable mobility and environmentally responsible manufacturing are right in line with Chattanooga's strong environmental commitment. As an expression of this shared commitment, the state of Tennessee, Volkswagen and Chattanooga-area organizations are partnering to distribute two saplings for every tree displaced by the project. The new trees will be planted by local school children.

According to United States Sen. Bob Corker, who was mayor of Chattanooga when the city and Hamilton County acquired the land and established Enterprise South as an industrial park, the Volkswagen announcement represents a new chapter in Chattanooga's success story. "Through twists and turns, our community has maintained focus, invested wisely and exercised tremendous effort and energy in recruiting a major employer to Enterprise South. The breaking of this final barrier and the realization of the vision to which we have held true will take us to levels we can only begin to imagine," said Corker.

He continued, "Volkswagen is the very best manufacturer and partner we could possibly have in terms of our shared values, and as a result of their enormous investment, not only will Chattanooga be forever changed, but our entire state will reap great benefits from the new suppliers that this facility will attract to the region. I am proud to have been part of a dedicated team that has worked seamlessly on this effort and celebrate this outstanding achievement for our city and our state."

United States Sen. Lamar Alexander praised Volkswagen's decision to locate at Enterprise South, saying, "Volkswagen and Chattanooga, the ideal marriage: one of the world's most admired companies and one of America's most livable cities. This decision keeps Tennessee on the road to becoming the No. 1 state in auto jobs. Congratulations especially to Gov. Bredesen, Sen. Corker and Mayors Ramsey and Littlefield for their leadership," Alexander concluded.

"Over the past seven months, more than 100 Tennesseans at the local, state and federal level have worked odd hours on short deadlines to help us reach this day," said Trevor Hamilton, vice president of economic development for the Chattanooga Area Chamber of Commerce. "From this day forward, we dedicate ourselves to partnering with Volkswagen to move from construction to production as quickly as possible. We will unify our team with Volkwagen's to ensure long-term success for the company, our community and the state of Tennessee."

With the new plant, Volkswagen will bring about 2,000 direct jobs to the area, and will add a significant number of jobs in related sectors. It is expected that these jobs will come from the tri-state area, pulling from the labor force of Tennessee as well as Georgia and Alabama. Volkswagen of America received an attractive, comprehensive package of incentives for the new facility from Gov. Bredesen's office and the Tennessee Department of Economic and Community Development. The statutory incentives are tied to job creation and capital investment. Additional support includes assistance for public infrastructure and job training, each designed to ensure the local economy best leverages Volkswagen's investment to benefit the local work force and ensure the facility's success.

"This area has a deep base of well-trained labor, with excellent engineering and manufacturing programs at the universities and technical colleges," added Jacoby. "Thanks to the visionary leaders and people of Chattanooga, we're confident that the values of this area are compatible with our own, and we envision a long and productive partnership."

Last year, Volkswagen outlined a new strategic direction in the U.S. based on five pillars: product, brand positioning, dealer network, organization and local production. As it moved forward to assess the potential for local production, the company considered many other site options and earlier this year had narrowed its search to Alabama, Michigan and Tennessee.

"We reviewed three excellent sites, all of which had the specific qualities necessary to build a plant in the United States," said Jacoby. "Both Gov. Granholm and Gov. Riley were strong advocates on behalf of their states and the citizens they represent. This was a difficult decision, but we look forward to continuing our relationships with both states. I thank both governors and their staffs."

[Source: VW]

Rumors suggest that the first shoot next week will take place in Bethlehem, Penn., and the set is outfitted to look like a Chinese city. It will feature a new concept car not seen in the first movie as well as two Blackhawk helicopters. A car hauler was also seen around the set with two Saturns and five unidentified Chinese cop cars.

[TFW2005; Transformers Live]

They claim that cargo ships will use obscene amounts of diesel fuel. We're sure they will, but the thing is, they run on diesel already, just of the nasty high-sulphur variety. You see, Technology for Sustainable Future Shipping Group is run, in part, by BP Krystallon and MES, who make scrubbers to clean high-sulphur diesel's naughty emissions. If cargo ships switch to low-sulphur, they'll loose money. By issuing the sensationalist release you see below, they hope to raise public fears, pressuring the shipping industry to stay high-sulphur. Let's hope other media-outlets don't fall for it.

PRESS RELEASE: Maritime Fuel Switch Could Drive Diesel Prices

LONDON, UK— A ship industry proposal to switch the world's merchant fleet to diesel fuel will send oil soaring through the $150-a-barrel mark, stoking fears of higher petrol prices and rampant inflation, an environmental technology group said on Thursday. It will mean even higher prices at British petrol pumps, with the GBP10 gallon a distinct possibility as demand begins to outstrip supply. Consumers will also feel the knock-on effect of higher food and energy bills.

Shipping circles are debating how to reduce harmful sulphur dioxide emissions, which cause acid rain, respiratory illnesses and heart problems.

Part of the industry, led by the independent tanker owners' organisation Intertanko, wants a total ban on high-sulphur marine fuels in favour of lower sulphur diesel fuels.

The International Maritime Organization (IMO), the UN agency responsible for preventing pollution from ships, will consider the controversial fuel proposal when its Marine Environment Protection Committee (MEPC) meets in London Monday (31 March).

The switch to diesel at sea would be equivalent to one and a half times the annual automotive diesel consumption in Europe.

Robert Clarke, spokesperson for the Technology for Sustainable Shipping Group said the idea "did not make any sense" environmentally or economically.

"It is not a cost-effective way to improve the environment," he said. "The oil market impact alone would likely more than double the cost of marine fuels and substantially increases prices of diesel, aviation jet fuel and heating oil on land.

Refineries would need to produce an extra 250 million tonnes of distillate fuels a year to meet the new diesel at sea demand, requiring around one billion tonnes per annum of crude.

"That's more than double annual production of Saudi Arabia," Clarke said. "The increase in the cost of crude oil is also likely to spell bad news for the economy as costs and prices rise. And the development poses a major threat to international economies, which are already suffering from the global credit crunch.

Clarke also said the ship industry proposal to switch to diesel risked raising carbon dioxide (CO2) emissions in the manufacturing process.

The Technology for Sustainable Shipping Group is an informal forum designed to communicate the benefits of emissions reduction technology. Members of the forum include The Torvald Klaveness Group (Norway), BP Krystallon (UK), Marine Exhaust Solutions (Canada) and Wärtsilä (Finland).

Of course, it's the 2008 model of the Tesla, which has already been sold out, but Tesla is taking reservations for the 2009 model But hey, this means it's real (kind of)! [Tesla Motors via GCC]

If you though the $6,000 Renault Logan was a breakthrough in mass cheapification, Toyota's got a message: Hold on to your centavos. According to President Katsuaki Watanabe, the company is developing a ground-up process of car building that will result in ultra-low-cost vehicles, and potentially, drive down costs across the company's line. The process, Watanabe says, will be all-encompassing, from design to production, and could involve developing new materials. No word on the rumor of slave bots that work for pitted olives and occasional squirts of WD40. [Thanks to Chris for the tip.] – Mike Spinelli

Toyota developing new ultra-low-cost production process - report [Euro2Day]

Related:
Building the $6000 Car: Renault's Logan [internal]

Hummer H2 plant to shut down for 2 weeks [Detroit News]

Related:
The Only Place Col. John Smith Would Drive This is Through a Wall: The Geiger H2 Hannibal; Reggie Bush Doesn't Go #1, Still Gets Two Hummers; F-U-H2, Now in a Mosaic [internal]

"Hope is not the best business strategy."
-Dieter Zetsche, September 19, 2006

We couldn't agree more, Dr. Z. The CEO of the German-American hybrid automaker (pictured, at right, in his best "Whatchu Lookin' At?" pose) spoke truth to power today in his annual "State of DCX" speech to shareholders this morning afternoon morning? (we're not so good with time zones), making clear his gameplan going forward wth the Chrysler Group. A gameplan which has to this point included a decent amount of wing n' prayer in the business strategy as it's pertained to the time needed to move from a product mix heavily reliant upon big SUV's and trucks to a product mix more reliant on the smaller scale stuff.

But the Chrysler Group's still making that switch, as they're now forecasting a doubled-up reduction of production cuts in the 3rd quarter's beginning of the year forecast, from an initial cut of 45,000 units to around 90,000 units. And those numbers, combined with expected and so-far announced cuts would peg a reduction in units of 135,000 from now until the end of the year, dropping market share for the Auburn Hills, MI side of the business from 11.2% of the US market to 10.6%. The biggest reduction is expected to come from idling plants making the Jeep Grand Cherokee and Jeep Commander — the big n' bad SUV's taking the biggest hit in sales as gas prices increased throughout the summer. The production cuts also come on top of last week's news the 'merican side of the cross-Atlantic merger-of-equals would lose $1.5 billion during the same quarter.

On his way to explaining how he'd be reaching "Step 2," Dr. Z. also took a few jabs at the UAW, positing the question of why they'll not be helping out with health care costs until "we've lost $10 billion." We're actually wondering that same question...cause it's probably not the best move for the oh-so-lovable auto union, but meh, since when have they ever cared for how they looked in public?

Seeing Huge Losses, Chrysler Slashes Production [NYT]

Related:
Breaking! DaimlerChrysler Issues A Billion Dollar Profit Warning [internal]

Toyota moves to unseat GM, outpace Ford, with reported plan to boost US production [AP via Seattle Times]

Related:
Quality is Job Ichi? Toyota Considering Delay of New Models to Tackle Snafus [internal]

Toyota's golden age is looking a bit brassy this morning. As the Wall Street Journal reports, the company may hold off introducing several new models by up to six months due to quality issues. The company's stutter-step offers a fine opportunity for American makers, who've upped their quality ratings of late, to make funny faces punctuated by strategic placement of thumbs and fingers at photos of Toyo prez Katsuaki "You Will All Pay Dearly for My Loss of Face" Watanabe. It's all about the rise in recalls of late, along with potential legal trouble for allegedly delaying a recall filing that may have prevented a fatal accident in 2004. Among the models that could be delayed are the next Sienna minivan, the Solara coupe and Avalon sedan. Sources say the prez, who says the company is in no way stalling, has been under 24-hour hiri kiri watch.

Related:
Toyota Gets A Rear End NHTSA Probe; Toyota Initiates Massive Recall; Talking Points: Could Toyota Buy GM?; Toyota to GM: Hello, Partner; We Must Break You [internal]

Word on the wire this morning is that FoMoCo will slow third-quarter output by 10.7% and cut production in the fourth quarter by 21% owing to its sales performance being teh suck, of late. That's a reduction of 20,000 and 168,000 units, respectively, compared to a year ago — adding up to a 9% full-year production drop. The cuts will cause sleepy time in the company's St. Thomas, Ontario; Chicago; Wixom, Mich.; Louisville, Ky.; Wayne, Mich.; St. Paul, Minn.; Kansas City, Mo.; Norfolk, Va.; and Dearborn, Mich. plants. According to the Wall Street Journal Ford's also looking to trim salary costs in North America by 10% to 30%. More on the Bold Moves that comprise the Way Forward are forthcoming in September, according to the those who know.

Ford to Slash Production Amid Sales Slump [MSNBC]

Related:
More on Ford [internal]

GM's announced that the Hummer H1 will cease production this year, saying that they want to take the brand in a more mass-market direction. We think this is dumb, not so much the wanting-to-increase-sales thing, but killing the vehicle that started it all. Of course, the H1 is a ridiculous machine. But it's a halo for the brand, and without it, the other Hummers are just going to seem like Chevys with upgraded off-road suspensions and plastic gewgaws tacked on. Oh wait, that's pretty much what they are. Meanwhile, thanks to the war, AM General doesn't expect any layoffs. Cue H sker D 's M.I.C. and drop the hammer.

GM to End Production of Hummer H1 [WaPo]

Related:
Hummer Giving Reggie bush Two H2s for Being Next Rich Athlete [Internal]

Porsche has announced that the last of the nearly-1300 Carrera GTs has rolled off its Leipzig line in a post-Cinco-de-Mayo hangover. We've never heard any less-than-stellar reports of the vehicle, but to at least one of us, the GT was nothing more than a technical marvel. It didn't invite us to get in and drive it, as the Ford GT or Lamborghini Murcielago did. One reporter's opinion, fo' shizzle, but we'll probably look back in five years and kick ourselves for not attempting to get a ride in one. We'll miss her, though we barely knew her. [Thanks to Ryan for the tip.]

End of a Carrera: Porsche Announces Wrap-Up of Production on $440,000 Car [Inside Line]

Related:
Porsche Carrera GT: Super Slingshot [Internal]

Ford's 2007 allotment of Rangers is already rolling off the lines at the St. Paul plant, which means one of two things: either the Blue Ovals are predicting banner sales for a compact pickup that became irrelevant sometime during the Clinton administration, or they wanna build the five trucks they'll need and then mothball the plant ASAP. The facility's scheduled for a 2008 closure, but working men are worried that the early start to Ranger production means Billy and the boys are planning to shutter it even sooner. [Thanks to Scott for the tip.]

2007 Ranger already rolling [St. Paul Pioneer Press]

Related:
Quality is Job 1! Ford Resumes Production at Truck Plants [Internal]

Nissan cutting U.S. production [Freep]

Related:
Nissan's Shiro Nakamura To GM: "You need to touch your customers more!" [internal]

Those who've criticized Honda for not having sufficient large-displacement engines in its line may have less to balk about in coming years. The company's looking to build a new factory specifically for its high-end powerplants including hybrid-drive systems and the new V10 the company's CEO said will power its next-generation NSX. The new, high-tech plant, which could be built in the Tokyo suburb of Yorii, Saitama Prefecture, will likely also take over some vehicle production from the company's aging Sayama factory. It'll be part of a plan to increase output of products destined for North America, not the domestic market. Did someone say V8 Ridgeline?

Honda Plans Plant for High-End Engines [Asahi]

Related:
Over the Back Fence: New Models from Honda? [internal]

Compared to where it was back in October, when the bankruptcy of interior components supplier Collins & Aikman Corp. stymied Fusion production, Ford's more than doubled the number of Fusions produced from 20,000 to 52,000. According to AutoWeek, the company is still around 3,000 cars under target, but that dealers are benefiting from the tight supply. As any economics freshman knows, tight supply plus strong demand equals no rebates, or even price premiums (plus, a positive news story). It almost seems like the strategy of a profitable automaker. Almost a shame AW put a negative spin on it.

Ford dealers can't get enough Fusions; supply disruptions, high interest lead to low inventories [AutoWeek]

Related:
Ford Fusion Launch Tripped by Supplier Delay; Jalopnik Reviews: 2006 Ford Fusion, Part 1 [internal]

DaimlerChrysler is investing $600 million in its Toledo North Assembly Plant, which will host its first non-Jeep assembly — the Liberty-based Dodge Nitro SUV. The plant will be expanded by 160,000 square feet and get a team of 150 new robots, all in the name of increasing the plant's flexibility to multiple products can be produced at the same time. Additional improvements will be made to the Toledo South plant, where a larger Jeep Wrangler will be built.

Related:
Spy Photos: 2007 Dodge Nitro, Close to Production [internal]

One of the disadvantages of today's high-strength steel body panels is that they can't be drawn as deeply in a metal press as the more pliable, thicker panels of yore without cracking leading to less flexibility for stylists. However, by using hydroforming, which stresses the metal less than a traditional stamping process, panels can be drawn up to 40% deeper than with traditional methods. The downside? Hydroforming a panel takes up to a minute, as opposed to a few seconds on to a conventional stamping press. Still, for low-volume vehicles like the Pontiac Solstice, this doesn't present much of a problem. The Detroit News has the lowdown on the process, which uses one stamping die and 3,000 psi to work its magic. Autographed copy of Lock Up The Wolves not included.

New twists in metal-forming put curves in all the right places [Detroit News]

Related:
Volkswagen Could Work on Porsche Panamera Production [Internal]

Our compadres at new eurocar blog Eurocar unearthed what could be BMW's multiyear plan for its model lines. Sure, it could be a fake — the absence of its Z4 Coupe is startling — but many of the other pipeline products seem to jibe with rumor, like the next-generation mini and Rolls-Royce Phantom convertible in 2007, and X6 allroad coupe in 2008. Also missing is a new, lower-priced Rolls-Royce model that BMW had confirmed would challenge the Bentley Continental franchise in 2009. We're figuring, if it's real, the roadmap is circa 2002-2003, but that, of course, is just a guess.

BMW Roadmap 2005-2012 [Eurocar Blog]

Auto spy photographers take heed: digital technologies are gunning for your business. Nissan executives recently said the company will use virtual test models to cut development time in half. The company wants to trim the time from design freeze, when a new model's look is set in stone, through the start of production to 10 months. That would halve the timeline from the current 20 months, assuming the car uses an existing platform. (Building a new model line from the ground up would take considerably longer — up to five years.) The virtual vehicles, which exist in digital form only, replace two sets of test models, and the company will only build one real set. Sneaking up on one of the virtual testers at a Death Valley 711 would be virtually impossible.

Nissan hopes to halve time for product development by creating virtual vehicles [AutoWeek]

Related:
Renault Using Virtual Reality to Develop Smart Braking; Who s the Dummy Now? Carmakers Accident-Avoidance System Testing Quandry; Porsche's See-Through Cayenne; Toyota Planning to Slash Hybrid Development Costs [internal]

Volkswagen officials in the company's Brand Product Strategy Committee — headed by Wolfgang Bernhard — recommended a new compact SUV should be built at the Palmela plant in Portugal from 2007, and saw fit to issue a press release stating their opinion. The move, the committee says, would reduce costs over the alternative, VW's Wolfsburg plant in Germany, by around $1,000 per vehicle. Bernhard also noted that the deadline for the decision is September 26 to meet production and tooling milestones. Could be that Bernhard, who also sites on the company's management board, is sending a message to trade union bosses in Germany that they had better plan to renegotiate the company's latest wage contract, or VW's harsh cost-cutting strategies will get a bit harsher.

More spy photos at German Car Fans

Related:
Volkswagen Gets Competitive: New Products Aim for Japan; Volkswagen Puts Upcoming Compact Off-Roader on Hold; Costs Face Slashings As VW Forwards Plan to Reverse Misfortunes [internal]

Quick, if you were Toyota, where in the US would you build your Prius hybrid — along with, maybe, a hybrid version of your Corolla? Damn straight it's California, or it could be if a report in the Wall Street Journal is accurate. Still, the company already announced, earlier this year that it would build a hybrid version of its next-generation, 2007 Camry at its Georgetown, Kentucky plant. If Toyota does pick California to produce US-bound Prii, it'll likely be at the Fremont plant it shares with GM, which produces the Pontiac Vibe as well as Toyota Corollas and Tacomas, as part of the companies' joint-production venture, New United Motor Manufacturing (NUMMI).

Related:
Toyota to Build Camry Hybrid in the US; Toyota to GM: Hello, Partner; We Must Break You [internal]